5 different ways to pay off credit card debt

CNN Underscored: Debt Consolidation for Consumers with Unknown Interest Rates and Interest Charges (Financial Reports)

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Life is harder when you have a lot of debt. It’s difficult to keep up with your debt payments, and you’re constantly strapped for cash. Not only that, having too much debt can affect the ability to build an emergency fund or get a home loan, which can mean sacrificing your long-term future.

Even worse, the average credit card interest rate or annual percentage rate (APR) is currently 16.27%. This means the average consumer with credit card debt has a large percentage of their payment going to interest charges. Paying this rate or even higher for credit cards is more difficult for consumers than it needs to be.

Paying off debt can be a tough task, even though it is often a piece of cake. The debt relief methods available can help you save money, pay off debt quicker or both.

Example: Let’s say you owe $10,000 across four credit cards with relatively high APRs. If you took out a personal loan for that amount, you would use the loan funds to pay off all of your credit cards and then pay off the loan in one lump sum. If you were approved for a $10,000 loan and the interest rate was 6 percent, you would have to pay $146 per month for seven years until your debt was eliminated. At the same time, you would pay a total of $2,271 in interest charges.

You have four credit cards with balances ranging from $7,000 to $4,000. With the debt snowball, you would focus your biggest payment on the $2,500 balance first, followed by the $3,300 balance and then the $4,000 balance before focusing on paying off the $7,000 balance last.

Personal loans can be a good choice for debt consolidation since they come with fixed interest rates, fixed monthly payments and a fixed repayment timeline. This means you know the exact amount of money you owe and when you’ll be debt-free.

A second debt consolidation method involves signing up for a balance transfer credit card. Consumers can get a balance transfer discount on their credit card for up to 21 months. A balance transfer fee of 3% to 5% applies, but having the entire time with zero interest makes it easier to pay down debt. After all, every cent paid toward debt at a 0% APR goes directly to whittling down your balance.

If you consolidate your debts, be careful not to use it as an excuse to overspending on your new credit cards. While canceling a credit card can hurt your credit score by reducing your available credit, it’s probably not a bad idea to put those unused cards in a sock drawer so you aren’t tempted to run up additional debt while you’re still in the process of paying down your existing debt.

Make sure the debt repayment strategy you use makes sense for your personality and your lifestyle. If you know you will use it for purchases, do not apply for a balance transfer credit card.

How to Get Rid Of Your Credit Card Debt: Four Steps to Make Your Debt Managing More Manageable In the 21st Century

There were many difficulties for people in a difficult year, with high inflation and the sinking stock market taking a toll on their finances. A new year is nearly here, and many people are considering their options in order to improve their finances in the years to come.

If you want to get out of debt, you need to be willing and able to change your lifestyle — at least for a while. Simple tips can help keep you on track.

So how can you lower your interest to a more manageable level? It may seem counterintuitive, but opening up a new credit card is the best choice.

The good news is that credit card issuers, after being stingy about approving people for balance transfer credit cards during the pandemic, are mostly back to normal at the moment, so it’s easier to get a new card now. Applying for a personal loan is another option, if you are turned down, because of a low credit score.

A personal loan can help you pay off your debt in full, with a set timetable for paying it off. so it doesn’t drag on forever. But if you’re considering a personal loan, make sure the interest rate on it is lower than what you’re currently paying — otherwise, it doesn’t make sense to switch.

There are other factors to consider if you’re applying for a personal loan, so if you’re thinking about this option, make sure to read our guide on why you might consider a personal loan and how to apply for one. And for more ideas on how to make your debt more manageable in 2023, check out our four steps to getting rid of your credit card debt.

New Year’s Resolutions Personal Finance: A Case Study in the Efficient Use of Online Savings Accounts for Living Underneath

Three or six months of living expenses should be saved up, according to some people. But if you don’t have any savings at all right now, don’t try to accumulate six months of savings all at once. Again, your resolutions should be achievable so you have a good chance of accomplishing them and setting yourself up for future wins.

So instead, make your goal that you’ll start an emergency fund in January and add to it each month in 2023. This could be as simple as putting a jar on your kitchen counter with a slot in the lid and dropping your loose change into it each time you get home. It will not add up to a lot, but it is better than nothing.

It is advisable to open a savings account and have a portion of your paycheck deposited into it on days when you are not at work. If you put aside money for yourself each month before you pay your bills, you areknown as “paying yourself first.”

You might be thinking that opening a savings account sounds like a hassle, and 20 years ago, it probably meant a trip to the bank and 45 minutes with a bank employee. You can do it at home in 10 minutes if you use any of the online savings account options.

Is it possible that you might be hesitant about using an online bank you aren’t familiar with? Then you might consider an option like the Capital One 360 Performance Savings account, which CNN Underscored recently reviewed. You might find other savings accounts that earn more interest, but if you’re looking for an established company and an extremely easy and quick way to start, it’s a solid choice.

Source: https://www.cnn.com/cnn-underscored/money/new-years-resolutions-personal-finance?iid=CNNUnderscoredHPcontainer

How to Make the Most of Your Money: A Guide to Budgeting and Saving for Your Household and BusinessExpansions (with an Appendix by Lee Yong, Weng, Yukawa)

If you don’t know how to make a spending plan, we have a guide that will teach you how to do it. If you are having trouble finding ways to cut back on how much you spend in order to save money, check out our ideas on how to reduce three of your major household expenses in just 30 minutes.

How do you improve your score? Well, like everything else on our list, you can’t go from a poor score to an excellent one all at once. But you don’t need to have a perfect credit score to make a difference. A good score will open a lot of doors that an average score couldn’t.

Knowing your score is the first step in improving your credit score. CNN Underscored offers several options for credit score check, many of which are free, and some where you can find it, but you might not know it.

Finally, while you should be careful of “bad credit repair” services that don’t have a known reputation, one service you can safely use is Experian Boost, which is run by one of the three main credit agencies. A good payment history for services that are not on your credit report, like your utility or streaming service bills, can improve your score by adding them to your credit file. And best of all, it’s free.

It is possible to get a Bilt Mastercard if you are a renter. It’s free to use to pay your rent, and you can earn rewards in the process. Even better, when renting at a Bilt Alliance property, you can choose to have your on-time rent payments automatically reported to the three major credit bureaus, which makes it a great way to build (or rebuild) your credit. The Bilt Mastercard doesn’t have an annual fee.

A Budget to Help You Pay Your Debts Off: An Approach Using Certificates of Deposit with Federally Unsured Borrowers

You will pay your debts off with the highest interest rates, then the ones with lowest interest rates, then the one debt, and finally none. This strategy helps you save the most on interest since you tackle debts with the highest APR first.

Look for signs of wasted cash while taking a closer look at your lifestyle. Try shopping grocery sales, cooking more meals at home and avoiding overspending places, because they might entice you.

Write down your income in one column and all your regular bills and expenses in another, then see how they compare. A written budget can help you stay focused and on track with your goals, including your current debt repayment strategy.

We hope one of the strategies in our guide can help you craft a plan that works — even if it takes a while. Call a credit counseling agency if you’re worried that you’re going to Default on your debt, falling short on your obligations, or even facing bankruptcy.

After two weeks of banking turmoil, the Federal Reserve on Wednesday continued its bid to beat down inflation by raising its key interest rate again, the ninth such hike over the past year.

That increase — which comes after US regulators undertook a number of confidence-boosting efforts to backstop banks and ensure liquidity — will have an effect on consumers’ savings, loans, credit cards and investments.

It can finally earn you some money if the rates are higher, because your most liquid savings can be set aside for emergency expenses or a down payment for a vacation. Unless, that is, you are keeping your money at the big banks. They are offering the lowest rates on savings.

If you choose an insured bank, you will know your deposits over $250,000 will be protected when the bank runs into trouble.

Some certificates of deposit with federally insured rates as high as 5% are one of the highest-yielding certificates of deposit.

Series I savings bonds may be attractive because they are made to preserve the buying power of your money. You can still get the current 6.89% rate on the I Bond if you purchase it before the end of April.

That rate will stay in effect for six months if you complete your purchase before it resets on May 1. The rate on the I Bond will fall if inflation falls.

There are some limitations: You can only invest a maximum of $10,000 a year. The first year is the one where you can’t redeem your bond. If you cash out between years two and five, you won’t be able to take the previous three months of interest.

Nevertheless, they preserve the buying power of your $10,000 if you don’t need to touch it for at least five years. They also may be of particular benefit to people planning to retire in the next five to 10 years since they serve as a safe annual investment that can be tapped if needed in the first few years of retirement.

Understanding Rates of Interest-Free Home Loans for Variable-Rate Debt: How Banks Seek to Properly Obtain the Best Rate

Each time the Fed raises the rate, lending rates that banks charge their customers tend to follow. That means consumer debt — especially variable-rate credit card debt — will get more expensive.

But first find out what, if any, fees you will have to pay (such as a balance-transfer fee or annual fee), and what the penalties will be for late or missed payments during the zero-rate period. The best strategy is always to pay off as much of your existing balance as possible — on time every month — before the zero-rate period ends. If rates keep going up, you will have to pay a higher interest rate on your remaining balance.

Bankrate says the personal loan rate was 10.71% as of March 8. The best rate will be determined by your income, credit score and debt-to-income ratio. To get the best deal, ask a few lenders for quotes, according to Bankrate.

Look for inflation to be the next place where mortgage rates go. If inflation keeps dropping, then mortgage rates are expected to drift lower too. Don’t expect them to go back to 3%.

Whether they rise or fall from here, securing a home loan may become tougher since banks, wanting to bolster their defenses against potential adverse events like a run on deposits, may want to take fewer risks and preserve more cash. One way to do that: make borrowing requirements more stringent.

If you try to get a house or car that doesn’t fit within your budget, it will cause trouble, regardless of the interest rates in the future.

The Role of Fixed Income Assets in Home Improvement Under Varying Rate Home Loans: Advice from a Mortgage Broker or a Tax Assessor

If you have a variable rate line of credit that you use for a home improvement project, then you should ask your lender if it is possible to bring the rate down on your outstanding balance.

For anyone within five to 10 years of a big goal — such as sending children to college or retiring — Williams recommends taking advantage of the fact that “fixed income investments [e.g., bonds and CDs] are more attractive now than they’ve been for a decade or more.” He suggests increasing your bond allocation gradually. That makes your portfolio less risky and more stable in terms of the income that you can throw off.

With uncertainties ahead, Tony Roth of Wilmington Trust suggests that an investor should consider reallocating 2% to 3% of their portfolio risk to bonds and taking advantage of higher returns.

If you are in a high tax rate, and have a taxable account, you could consider tax- free municipal bonds or a low-cost, very short-term muni money market fund.

If you pay off your bill in full every month that is not a concern for you. But if you carry a balance, and especially if you only pay the minimum amount due, you will be shelling out more dollars every month just for interest and it will take you longer to pay off what you owe.